Question: The following unadjusted trial balance is prepared at fiscal year-end for FAB Products Company.
Rent expense and salaries expense are equally divided between selling activities and the general and administrative activities. FAB Products Company uses a perpetual inventory system.
Required: 1. Prepare adjusting journal entries to reflect each of the following.
a. Store supplies still available at fiscal year-end amount to $3,300.
b. Expired insurance, an administrative expense, for the fiscal year is $3,000.
c. Depreciation expense on store equipment, a selling expense, is $2,800 for the fiscal year.
d. To estimate shrinkage, a physical count of ending merchandise inventory is taken. It shows $22,200 of inventory is still available at fiscal year-end.
2. Prepare a multiple-step income statement for fiscal year 2011.
3. Prepare a single-step income statement for fiscal year 2011.
4. Compute the current ratio, acid-test ratio, and gross margin ratio as of October 31, 2011.